Test your basic knowledge |

AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






2. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






3. Entry (or exit) of firms does not shift the cost curves of firms in the industry






4. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






5. AVC = TVC/Q






6. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






7. The imbalance between limited productive resources and unlimited human wants






8. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






9. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






10. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






11. Product demand - productivity - prices of other resources - and complementary resources






12. The mechanism for combining production resources - with existing technology - into finished goods and services






13. Es = (%dQs) / (%dPrice)






14. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






15. Models where firms agree to mutually improve their situation






16. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






17. Models where firms are competitive rivals seeking to gain at the expense of their rivals






18. The price of a good measured in units of currency






19. A firm that has market power in the factor market (a wage-setter)






20. Ed = 8 - infinite change in demand to price change






21. A good for which higher income decreases demand






22. Ei = (%dQd good X)/(%d Income)






23. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






24. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






25. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






26. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






27. Exists if a producer can produce more of a good than all other producers






28. The total quantity - or total output of a good produced at each quantity of labor employed






29. 0 < Ei < 1






30. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






31. ATC = TC/Q = AFC + AVC






32. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






33. Exists at the point where the quantity supplied equals the quantity demanded






34. Demand for a resource like labor is derived from the demand for the goods produced by the resource






35. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






36. Exists if a producer can produce a good at lower opportunity cost than all other producers






37. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






38. The lost net benefit to society caused by a movement away from the competitive market equilibrium






39. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






40. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






41. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






42. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






43. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






44. The practice of selling essentially the same good to different groups of consumers at different prices






45. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






46. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






47. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






48. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






49. A good for which higher income increases demand






50. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.